An Investment Is Expected to Generate Net Operating Cash Inflows

question 34

Multiple Choice

An investment is expected to generate net operating cash inflows of $25,000 per year for each of the next 5 years. If the initial amount invested is $101,000, which of the following is closest to the internal rate of return?

• A) 24.8%
• B) 6.5%
• C) 4.0%
• D) 7.5%

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Definitions:

Money Supply

The sum of monetary holdings in an economy, which includes cash, coins, and the balances in checking and saving accounts, at a specific instant.

Standard of Value

A criterion that allows the value of various goods and services to be compared.

Store of Value

A store of value is an asset that maintains its value over time without depreciating, allowing it to be saved, retrieved, and exchanged at a later time.

Medium of Exchange

A mediating tool or mechanism that enables the buying, selling, or exchanging of products among individuals or groups.